PWC have released their predictions for how technology in the FinTech sector is being shaken up in 2020 and beyond. It’s a big read so here’s a summary, and there’s a link to the full report below.
While new market entrants used to struggle to break into financial services, today the market is dominated by FinTech disruptors. Having managed to turn the world on its head, these start-ups (as they often are) focus on innovative technology in everything from mobile payments to insurance. Not only are they innovating, they’re also far more profitable than traditional service providers. In their recent PwC Global FinTech Survey, industry respondents reportedly said that a quarter of their business, or more, could be at risk of being lost to standalone FinTech companies within 5 years.
Given their success, it’s no wonder global investment has skyrocketed in recent years, and their impact will only continue to strengthen.
In a trend that has been growing in the last few years, and which has been fueled by open banking, consumers are wanting all their investment and banking services available to them without having to go to their bank.
Instead, the sharing economy refers to decentralised asset ownership and using information technology to find efficient matches between providers and users of capital, rather than automatically turning to a bank as an intermediary.
Determining customer needs and wants used to rely on focus groups, surveys and interpretation. These provided real consumer behaviour but amounted to snapshots, and results tended to be hazy.
In the future, technology will give businesses access to exponentially more data about those consumers, with huge amounts of insight into their needs. Advanced analytics will help business unlock that data and given them the power to deliver exactly what customers want.
The shift to cloud-based computing has only just begun. Many financial services institutions use cloud-based software-as-a-service (SaaS) applications for business processes that might be considered ‘non-core’, such as CRM, HR and financial accounting.
In the future, core service infrastructures in areas such as consumer payments, credit scoring and statements and billings for asset managers’ basic current account functions will be well on the way to becoming cloud-based.
While financial institutions have been to some extent forced to adapt to a world dominated by FinTech, regulators are naturally also going to adopt a wide range of data gathering and analytical tools. Examples of the type of technology regulators will have to evolve towards include the supervisory procedures and data requests tied to ‘stress tests’, asset quality reviews and enhanced reporting requirements coming out of Washington, London and Basel.
PwC says that ‘using sophisticated analytical tools on large volumes of data, regulators can compare scenarios and address potential issues before they become full-scale market problems’, paving the way to yet more technological integration further down the line.
Read the full report: https://www.pwc.com/gx/en/financial-services/assets/pdf/technology2020-and-beyond.pdf
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